In its most recent attempt in lowering the inflation rate,the Bank of Canada announces explicit targets for the rate of change in "core CPI," because ________.
A) core CPI excludes volatile components, such as food, energy, and the effect of indirect taxes
B) core inflation is useful in assessing whether trend inflation is on track for the medium term
C) Both A and B of the above.
D) None of the above.

Question

Quizplus · Accepted Answer

Core CPI excludes volatile components such as food, energy, and the effect of indirect taxes, making it a more reliable indicator of underlying inflationary pressures. Additionally, core inflation is useful in assessing whether trend inflation is on track for the medium term. Therefore, both A and B are correct reasons for the Bank of Canada's announcement of explicit targets for core CPI.

In Its Most Recent Attempt in Lowering the Inflation Rate,the